With the global trade negotiations at a crucial stage, most of the focus has been on cutting subsidies and tariffs.
For now, the negotiators are kicking down the road another sticky issue, Europe's insistence that the United States change the way it provides famine relief.
The Europeans, who have agreed to phase out their export subsidies, want the United States to stop donating surplus U.S. commodities and start giving cash that can be used to buy food closer to where it's needed.
That's a trade-off of roughly $3 billion in European export subsidies for less than $1.5 billion in U.S. food shipments.
U.S. trade officials say the EU negotiators need to show their farmers they are trying to get something in return for eliminating trade subsidies.
But critics of U.S. policy say it makes better sense to donate cash, rather than surplus corn or soybeans. The food could be purchased closer to where it's needed and distributed more quickly than U.S. commodities.
Canada is moving in that direction already, announcing in September that half of its food aid is going to be purchased in developing countries, compared with only 10 percent now.
Farmers in poor countries can be hurt by the donations. For example, corn prices in Malawi dropped from $250 to $100 per ton in one year after local markets were flooded with donated grain and commercial imports, according to a report by Oxfam International, a development group.
"Food aid should be about helping hungry people, not helping our exports," says Gawain Kripke, senior policy adviser for Oxfam America.
Yes, the EU demand is a negotiating tactic, but it's also an effort to address a legitimate complaint that U.S. food aid serves a similar function as EU export subsidies, Kripke said.
"There's real evidence that cash is more efficient and effective than supplying food. It's cheaper and faster," he said.
The Organization for Economic Cooperation and Development, an intergovernmental think tank based in Paris, made a similar point in a study issued in September.
The Bush administration has offered to put some as-yet-unspecified limits on food-aid programs to guard against disrupting commercial sales and harming farmers in poor countries.
It won't be easy to change the system. The administration wanted to shift some food aid from commodities to cash in the 2006 budget, arguing that 50,000 lives could be saved by expediting the distribution of food.
However, Congress rejected the idea in the face of strong opposition from agribusiness interests and charities that benefit from the aid programs.
Charities fund their development projects in Africa and elsewhere through sales of the donated commodities. Grain companies and shippers benefit by getting to process and transport the food.
U.S. negotiators have told European officials that it is absurd to convert all food aid to cash, said an administration trade official who described the talks on condition of anonymity.
"There is a real strong sense in Europe that they have made a strong concession on export subsidies and they may need to be paid for it by something we do," the official said.
Some new rules on food aid seem inevitable.
But Chris Garza, who follows the negotiations for the American Farm Bureau Federation, said he expects the aid issue to be one of the last ones settled.Des Moines Register
